August 07, 2015
In 2013, Geni Klein lost her job. Recently hired, she was the first laid off, too.
That last position, like the one before, was with a local non-profit – before that she had worked in a brokerage firm for decades, pulling down a nice living. Today Klein works part-time at Macy’s for $8 an hour. She hasn’t been able to find a new full-time job.
“I’ve interviewed with a lot of banks, brokerage firms, nonprofits but it’s harder than people think it is,” says Klein, 65, who spends a lot of time volunteering, and sits on the board of her local community development corporation.
“I’m fortunate in that I’m not in the situation of most people I know who are unemployed – I don’t have a mortgage, kids, debt, a car – but I’m not rich and I can’t retire," she says. "I probably should be looking harder than I’m looking, but it gets frustrating.”
Many Americans are in Klein’s position, especially Baby Boomers who are not ready to retire and need to work. But you wouldn’t know it from just glancing at Friday morning’s monthly jobs report from the Bureau of Labor Statistics. The “Employment Situation Summary” looks good at surface level: the American economy added 215,000 jobs in July, a bit less than last month. The unemployment rate remained the same at 5.3 percent, close to what many economists claim is full employment.
RELATED ARTICLE: Solid U.S. jobs report bolsters case for Fed rate hike
But troubling trends remain submerged in the flood of data. Despite the signs of health in these latest jobs numbers, the economy is not exhibiting the healthy signs of full employment. Wages remain stagnant and alternative employment measures are bleaker than the standard unemployment rate.
“We are definitely seeing recovery but the extent of it is not as much as you would think from the unemployment rate,” says Nick Bunker, policy analyst at the Washington Center for Equitable Growth. “There is this long decline of labor force participation due to a variety of factors, mostly demographics. Obviously the unemployment rate has dropped quite a bit the last two years, but that’s hard to look at as a pure indicator of labor market health like people did prior to the recession.”
There are a couple of factors at work that undermine the reliability of the unemployment rate. As the huge Baby Boomer generation ages, the labor force participation rate declines as they either retire or, in cases more extreme than Klein’s, cannot find work at all – even part-time work. This jobs report revealed a labor force participation rate of 62.6 percent, unchanged from last month, the lowest level since 1977.
Then there are also those, like Klein, who are looking for full-time work and cannot find it. The Bureau of Labor Statistics publishes an alternative measure of unemployment that takes into account those who are discouraged and can’t find work and those who work part-time “for economic reasons”—meaning they can’t find what they are looking for. In that light, the unemployment rate is substantially higher: 10.7 percent. (Although that number is trending downwards, too: it was 10.8 percent in June, and 12.6 percent in July of 2014.)
This persistently high rate of underemployment undermines the promise of the low official unemployment rate. Usually when the labor market seems to be getting tighter, wages go up as employers compete for workers. But the July jobs numbers show that wages are still stagnant, as they have been for years, increasing a mere 2 percent over last year.
“It’s a much slower recovery, a lot longer than any other recession,” says John Dodds, director of the Philadelphia Unemployment Project. He has worked in the field of employment advocacy since the mid-1970s, helping local residents weather six recessions. “It’s getting better but the wages aren’t coming back. In 1983, the Reagan Recession, it was really severe but it came back a lot faster. Now a certain class of people are having a hard time getting back to work. Lots of people just aren’t fitting into the new economy.”
Zeroing in on local data can be even more troubling. Of the nation’s 12 largest metropolitan areas, Philadelphia is in last place for jobs growth (with a rate less than half the national level). The number of jobs in the city of Philadelphia is growing and at levels highest since 2004, but there are still 80,000 fewer jobs than there were in 1990. The median income is almost $4,400 lower than it was in 2000 (after adjusting for inflation).
If the labor market was stronger, people like Klein would be more likely to find full-time work and wages would increase. But that isn’t happening nationally or locally. Instead researchers with the San Francisco Federal Reserve estimate that the unemployment rate that includes those who have given up looking for work or are working part-time by necessity is unlikely to fall substantially anytime soon.
That’s certainly been John Layne’s experience since he was laid off from his position as a lab assistant with the University of Pennsylvania in 2009. Since then he has been unable to find a full time job, working for spells at the Lord and Taylor on City Line Avenue, as a custodian for the William Penn School District, and at a concession stand at Lincoln Financial Field.
At 63, he has depleted his savings and had to start taking Social Security early – at a substantial reduction in benefits. He also received support from his church and is living with a friend until his prospects improve.
“I was working when the Eagles or Temple played, and a Taylor Swift concert,” says Layne, who hopes to pick up more shifts at Lincoln Financial in the fall. “At first I was looking for something full time, but now I’m just looking for something to supplement my Social Security income. I would like to work for another 4 or 5 years and build up a kitty, then I could retire.
"But I’m not doing anything right now.”